Mexico has made the first moves to launch its annual $1 billion oil hedging prog...
NEW YORK/MEXICO CITY - Mexico has made the first moves to launch its annual $1 billion oil hedging program by asking banks for quotes, sources familiar with the deal said, while buying in financial oil options contracts for 2020 has risen in recent days, consistent with the giant trade.
For more than a decade, Mexico’s government has paid for a hedge in a bid to guarantee its revenues for the coming year from oil exports by state oil company Pemex. The series of highly anticipated oil trades is seen as the world’s top sovereign derivatives trade. “They are in the final stages of the hedge,” the Mexican source said of the negotiations, ahead of the country presenting its 2020 budget on Sunday.Mexico garners a large part of its public revenues from selling Maya crude oil and therefore aims to protect those sales with put options that grant it the possibility to sell oil at a certain price at the future.
While the fences saw limited trade volumes, brokers also saw increased buying in volatility in anticipation of market gyrations as Mexico gets into the market.
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